Strategic planning has been falling out of favor with business leaders for many years. They either see it as the antithesis of their organization’s agile ways of working or as a slow and painful annual exercise with an outcome that is rapidly overtaken by business reality.
Leaders are right to do so. Strategic planning as we know it has long been obsolete. This doesn’t mean there is no need for strategic planning.
In fact, to successfully navigate through today’s fast-changing and uncertain business landscape, leaders need to engage in it far more often.
For example: Brexit
The UK is an important export market for many companies in the European Union. On 29 March 2019, the UK will leave the EU (Brexit) and this will have significant consequences for exporters.
Demand for their products is expected to continue as the UK, like every other country, lacks the capacity and capability to be self-sufficient. For instance, 40 percent of peppers and tomatoes sold in the UK are imported from The Netherlands, an enormous amount that British farmers are simply not able to produce themselves to meet domestic demand.
What remains uncertain in the lead up to Brexit, however, is the outcome of the UK-EU negotiations. For example, will it be a hard or a soft Brexit? Will there be import tariffs? Will flights be affected? Time will tell.
Many companies, however, cannot afford to wait and see as it will spell the end of their business. They need to be ready for the unexpected before Brexit becomes a reality. That requires a different way of thinking about strategy
Even when business conditions change
Informed by received wisdom and practice, many have learned to see strategy as if it is a puzzle. That means, it is tacitly assumed that whatever problem the strategy is meant to solve, it is definable and right answers exist.
The challenge is thus to find a right answer amid vast amounts of industry, market and competitor data through the application of sophisticated strategy frameworks and analysis techniques. Improve any or all of these aspects and the logic is that a better answer is found faster – even when business conditions change.
If business conditions change, particularly in dynamic, complex and unpredictable ways as they do in nearly every market, strategy cannot be a puzzle.
Per definition, puzzles have clear cause-and-effect relationships and hence one or at most a limited number of right answers. If answers are contingent on future interactions of known, unknown or unknowable factors, you are faced with a mystery.
Brexit is a very good example of this. Treating a mystery as if it is puzzle is like trying to solve the unsolvable. It is impossible. Consciously or unconsciously, many business leaders have realized this and given up on strategic planning.
Scenario planning and business wargaming
With the world increasingly offering business leaders mysteries, the best approach to strategic planning is not to give up on it, fly by the seat of one’s pants or adopt a wait-and-see attitude.
The cost of failure might be unacceptable – and avoidable. Instead, strategic planning needs be to transformed into an ongoing, discovery-driven process with the purpose of preparing the organization to thrive in the face of uncertainty.
This approach to strategic planning is analogous to playing or gaming, i.e. learning how to navigate the world and adapt to it without being directly at risk.
This is where strategic gaming techniques such as scenario planning and business wargaming come into their own. These approaches are as old as strategy itself but received wisdom kept them out of many business leaders’ sight for too long.
At InContext, we are bringing these strategic gaming techniques back into the limelight so that ambitious leaders like you can achieve the positive breakthroughs you’re looking for and change things for the better: for the organization itself, the people who work there and ultimately for society.